Business / Local
Govt, NSSA in tussle over Vimpelcom 60% shares in Telecel
13 Nov 2015 at 08:03hrs | Views
Zimbabwe government was recently engaged in hot tussle with the National Social Security Authority (NSSA) over the Vimpelcom 60% shares which were up for grabs in the Telecel Zimbabwe Company.
The government has reportedly taken over the control of Telecel Zimbabwe after its tussle with NSSA over the shares.
NSSA recently wrote a letter to Telecel (Pvt) seeking to acquire the company's 60% shares a letter that sparked a length debate between the organisations and the Minister of Information Communication Technology, Postal and Courier Services Supa Mandiwanzira.
In a letter dated August 20 2015, NSSA wrote to Telecel's 60% shareholder asking for the acquisition of the shares on a non-binding expression of interest.
"(NSSA) wishes with this letter to convey our interest in acquiring 60% of the issued share capital holding of Telecel (Pvt) Limited. We understand that the seller of the 60% shareholding is an off shore entity. Such proposal of the acquisition would be an exchange for the payment of cash spread over a maximum period of 12 months," reads the letter.
NSSA indicated that it was an entity of $1,2billion and generates surplus contributions in excess of $10 million per month which it is authorized to invest.
In its expression of interest it indicated that it would be acquiring the 60% of Telecel on debt free or cash free basis for cash. The company said the Assets and current cash flow generation would independently justify a valuation of at least $40m promising to do comprehensive due diligence of Telecel and gain its investment committee and board approval for the proposed transactions.
The letter was signed by James Matiza NSSA's General Manager.
Robin Vera wrote to Matiza that he got a position on Telecel transactions and would prefer them to have a round robin resolution so that an extract of the minutes would be sent to Minister Mandiwanzira.
She said the transactions would be such that NSSA would not expend money.
"But in a worst case scenario we would have to pay $33m in 90 days for 60% of equity in Telecel and the $80m shareholder's loan," Robin wrote. "In a best case scenario NSSA will get 5% of Zarnet's equity and loan for giving guarantee."
Vera also wrote to Mandiwanzira about the deal and the copy of his letter reads, "I understand you are requesting that NSSA provides a letter of confirmation of support to finance the transaction for up to $40m, that transaction is a Zarnet transaction with no equity being offered to NSSA, Zarnet has the $7m deposit to pay on completion and will be given 90 days to fund the balance of $33m, that should Zarnet fail to fund the $33m then NSSA steps in and takes over the transactions with Zarnet forfeiting its $7m. It sounds to me that all NSSA will be doing is to provide guarantee for the payment by Zarnet which I believe I cannot motivate."
He asked the minister to understand that he did not want to stand on the way of the deal but understands that it is his (minister) transactions. He said he supports the minister's call for NSSA guarantee but asked him tom consider a token of 5% for NSSA of the equity and loan acquired. He said he will be suggesting to his team that they provide Zarnet with necessary documentation.
"Should a cash call arise it will after 90 days and for $33m but the NSSA will step into the shoes of Zarnet," Vera wrote. "All these arrangements can be documented outside Vimpelcom so they have no need including the transfer of the token equity and loan to NSSA."
Minister Mandiwanzira responded accusing Vera for departing from earlier commitment to do back to back structure that allowed the deal to be signed, with NSSA getting 40% of the total equity secured by government, that Zarnet will surrender all its shares to secure NSSA. Zarnet would then raise money to pay off NSSA.
"This is the general understanding I had confirmed in writing by you to me," Mandiwanzira wrote.
The minister proposed Vera to consider that government had agreed to by Vimpelcom's receivables at a 50 % discount it will pay a total of $40.
"It will pay $0, 00 equity as we believe there is no equity value. Zarnet has raised $7m deposit which will be paid on signing, after which it will have 90 days to pay balance. Zarnet through the ministry has commitment of funding form third party approved by my principals but not ideal to share identity with Vimpelcom to pay off the balance," the minister said.
He appealed for NSSA commitment in the deal in writing to finance the transaction. He said in the likelihood of Zarnet failing to pay NSSA would then takeover transactions on the terms it have proposed.
Mandiwanzira said there is a lot of work that would be done on the 40% shareholder.
"It could be a bruising battle which do not think NSSA should be at the forefront of it," he said. "I could shade some more light," he said.
Vera wrote again to the minister indicating that he met with NSSA investment team and committee to discuss NSSA support for government project to acquire Vimpelcom's shareholding and shareholder's loan in Telecel.
"I understand the Vimpelcom's interest to be 60% equity and $80m shareholder's loan. I can disclose that NSSA investment team and management had formerly declined to participate in the in the transaction based on the claim that NSSA was just a funder providing an unsecured loan," Vera wrote. "This is fundamentally against what NSSA's mandate is given that NSSA is the custodian of pensioners' fund on which securing capital and gaining a return on the same is critical requirement."
Vera said he spoke to Labour and Social services Mi9nister Pricilla Mupfumira who confirmed that the government had a decision to have the transaction done and he (Vera) asked NSSA to evaluate transaction on the bases NSSA acquires 60% of Vimpelcom equity and $80 m loan for a consideration price of $40m inclusive.
He said the $40m would be spread over minimum of six months from the date of satisfaction of any sale agreement. He said another condition was that NSSA grant a call option to the transaction introducer, Zarnet to acquire up to 60% of NSSA's acquired interests for cash for 120 days fom date of signature of the agreement at the same transaction cost NSSA would have paid plus a premium of 10%.
"We would also want to gain assurance that government would be willing to convert its $105m licence fee into equity, alongside the $80m acquired shareholder's loan. The challenge will be that the 40% shareholder will likely block both a suggested rights issue or conversion of the loans. We will therefore need to navigate our way around this corporate finance challenge," Vera wrote.
The government has reportedly taken over the control of Telecel Zimbabwe after its tussle with NSSA over the shares.
NSSA recently wrote a letter to Telecel (Pvt) seeking to acquire the company's 60% shares a letter that sparked a length debate between the organisations and the Minister of Information Communication Technology, Postal and Courier Services Supa Mandiwanzira.
In a letter dated August 20 2015, NSSA wrote to Telecel's 60% shareholder asking for the acquisition of the shares on a non-binding expression of interest.
"(NSSA) wishes with this letter to convey our interest in acquiring 60% of the issued share capital holding of Telecel (Pvt) Limited. We understand that the seller of the 60% shareholding is an off shore entity. Such proposal of the acquisition would be an exchange for the payment of cash spread over a maximum period of 12 months," reads the letter.
NSSA indicated that it was an entity of $1,2billion and generates surplus contributions in excess of $10 million per month which it is authorized to invest.
In its expression of interest it indicated that it would be acquiring the 60% of Telecel on debt free or cash free basis for cash. The company said the Assets and current cash flow generation would independently justify a valuation of at least $40m promising to do comprehensive due diligence of Telecel and gain its investment committee and board approval for the proposed transactions.
The letter was signed by James Matiza NSSA's General Manager.
Robin Vera wrote to Matiza that he got a position on Telecel transactions and would prefer them to have a round robin resolution so that an extract of the minutes would be sent to Minister Mandiwanzira.
She said the transactions would be such that NSSA would not expend money.
"But in a worst case scenario we would have to pay $33m in 90 days for 60% of equity in Telecel and the $80m shareholder's loan," Robin wrote. "In a best case scenario NSSA will get 5% of Zarnet's equity and loan for giving guarantee."
Vera also wrote to Mandiwanzira about the deal and the copy of his letter reads, "I understand you are requesting that NSSA provides a letter of confirmation of support to finance the transaction for up to $40m, that transaction is a Zarnet transaction with no equity being offered to NSSA, Zarnet has the $7m deposit to pay on completion and will be given 90 days to fund the balance of $33m, that should Zarnet fail to fund the $33m then NSSA steps in and takes over the transactions with Zarnet forfeiting its $7m. It sounds to me that all NSSA will be doing is to provide guarantee for the payment by Zarnet which I believe I cannot motivate."
He asked the minister to understand that he did not want to stand on the way of the deal but understands that it is his (minister) transactions. He said he supports the minister's call for NSSA guarantee but asked him tom consider a token of 5% for NSSA of the equity and loan acquired. He said he will be suggesting to his team that they provide Zarnet with necessary documentation.
Minister Mandiwanzira responded accusing Vera for departing from earlier commitment to do back to back structure that allowed the deal to be signed, with NSSA getting 40% of the total equity secured by government, that Zarnet will surrender all its shares to secure NSSA. Zarnet would then raise money to pay off NSSA.
"This is the general understanding I had confirmed in writing by you to me," Mandiwanzira wrote.
The minister proposed Vera to consider that government had agreed to by Vimpelcom's receivables at a 50 % discount it will pay a total of $40.
"It will pay $0, 00 equity as we believe there is no equity value. Zarnet has raised $7m deposit which will be paid on signing, after which it will have 90 days to pay balance. Zarnet through the ministry has commitment of funding form third party approved by my principals but not ideal to share identity with Vimpelcom to pay off the balance," the minister said.
He appealed for NSSA commitment in the deal in writing to finance the transaction. He said in the likelihood of Zarnet failing to pay NSSA would then takeover transactions on the terms it have proposed.
Mandiwanzira said there is a lot of work that would be done on the 40% shareholder.
"It could be a bruising battle which do not think NSSA should be at the forefront of it," he said. "I could shade some more light," he said.
Vera wrote again to the minister indicating that he met with NSSA investment team and committee to discuss NSSA support for government project to acquire Vimpelcom's shareholding and shareholder's loan in Telecel.
"I understand the Vimpelcom's interest to be 60% equity and $80m shareholder's loan. I can disclose that NSSA investment team and management had formerly declined to participate in the in the transaction based on the claim that NSSA was just a funder providing an unsecured loan," Vera wrote. "This is fundamentally against what NSSA's mandate is given that NSSA is the custodian of pensioners' fund on which securing capital and gaining a return on the same is critical requirement."
Vera said he spoke to Labour and Social services Mi9nister Pricilla Mupfumira who confirmed that the government had a decision to have the transaction done and he (Vera) asked NSSA to evaluate transaction on the bases NSSA acquires 60% of Vimpelcom equity and $80 m loan for a consideration price of $40m inclusive.
He said the $40m would be spread over minimum of six months from the date of satisfaction of any sale agreement. He said another condition was that NSSA grant a call option to the transaction introducer, Zarnet to acquire up to 60% of NSSA's acquired interests for cash for 120 days fom date of signature of the agreement at the same transaction cost NSSA would have paid plus a premium of 10%.
"We would also want to gain assurance that government would be willing to convert its $105m licence fee into equity, alongside the $80m acquired shareholder's loan. The challenge will be that the 40% shareholder will likely block both a suggested rights issue or conversion of the loans. We will therefore need to navigate our way around this corporate finance challenge," Vera wrote.
Source - Byo24News
